As the macroeconomic conditions continue to be gloomy, venture capitalist and private equity funding is witnessing a lull with lesser number of deals and smaller deal sizes.

During the two-month period from January, funding witnessed 78 per cent dip in number of deals and in value terms, the dip was around 90 per cent. Just 20 deals were struck during the past two months, compared to 94 that happened during the corresponding period last year.

The total deal value fell from $2.8 billion in January-February 2008 to $ 250 million this year, according to statistics available with venture capital research company, Venture Intelligence.

“As far as funding is concerned, January-February was very quiet. Most of the deals that happened were struck last year, were formalised around this time of 2009,” said Arun Natarajan, founder and CEO of Venture Intelligence. The first two months of 2009 saw even lesser deals compared to the Oct-Nov period last year, when the economic slowdown had started affecting the India Inc. During Oct-Nov, 30 deals worth $520 million had been struck compared to 91 deals worth $2.5 billion during the corresponding period last year.

Further, during January and February, the value of individual deals also shrunk. The largest deal closed during last two months was worth $50 million. The funding came to Nimbus Communications from Cisco Systems, 3i and Oman International Funds. Another deal worth $30 million went to the Home Solutions Retail of Pantaloon Group from ICICI Ventures and Kotak Private Equity.

Early last year, the value of three top deals totalled $710 million. The largest deal was Farallon Capital, L N Mittal India and Internet Ventures investing $395 million in Indiabulls Power Services. KKR & Co had invested $250 million in Bharti Infratel Services and Balapur Paper received $115 million from J P Morgan and GIC.

“Rather than funding a new entity, PE firms now prefer to make additional investment in an existing company,” said Natarajan, adding that Nimbus and Home Solutions had earlier received funds from the same PE firms.

Sectors like health care and education that are not much affected by the economic slowdown, continue to receive funding, but they cannot compensate for the lesser number of deals being struck, he added. In education, Intel Capital and Helion Venture invested $6.5 million in Global Talent Track.